Alok Sharma responds to debate on leaseholders of the St Mary Magdalene and Holy Jesus Trust in Newcastle

1st November 2017

Alok Sharma responds to the debate and outlines Government efforts to strengthen leaseholders’ protections against unscrupulous abuses by freeholders, landlords and managing agents.

I thank the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for the timely manner in which this issue has been raised. I do empathise, as I am sure we all do, with the experience of her constituents, as she has related it. I want to be absolutely clear: the Government want to see fairness in the housing market, and that absolutely extends to the leasehold sector. She alluded to the fact that the Government have clearly signalled their intention to strengthen leaseholders’ protections against unscrupulous abuses by freeholders, landlords and managing agents.

With regard to the specifics of the case the hon. Lady has raised, I know she corresponded several times with my predecessors. Her constituents will be incredibly grateful to her for continuing to highlight this issue of great importance for them, and to the hon. Member for Gateshead (Ian Mearns) for attending the debate as the hon. Lady’s constituency neighbour.

I will return to the specifics of the case that the hon. Lady has raised, but first I would like to use this opportunity to set out the Government’s position on tackling leasehold abuses and clarify how the current legislation is applied to charitable organisations.

I recognise the advantage of the Minister setting that out, but I hope that before he concludes his remarks he will specifically say what he will do for my constituents, for whom I called this debate.

I always try to respond to the issues that are raised in a debate, and I hope I will do so in this case too.

Many leaseholders have concerns about fairness and transparency within the leasehold sector. Our housing White Paper, and the all-party parliamentary group on leasehold and commonhold reform, have helped to move leasehold issues up the political agenda. The White Paper identified pressing areas for reform. We have talked about galvanising the house building market overall, but specifically in terms of leasehold. In our recent consultation, “Tackling unfair practices in the leasehold market”, we consulted on whether new-build houses should be sold as leasehold and on the issue of onerous ground rents.

The consultation, as the hon. Lady pointed out, has closed. It clearly struck a chord with consumers and leaseholders. As she said, we have received over 6,000 responses, many of them extremely detailed. My officials are currently analysing those responses. I would like, before the end of the year, to announce the Government’s response to the consultation and propose reforms to be taken forward.

Let me now turn to the hon. Lady’s direct concerns about charitable organisations such as the St Mary Magdalene and Holy Jesus Trust. I understand that, as she set out, a small number of individuals have in the past acquired leases of houses on the St Thomas estate and now wish either to extend the lease or acquire the freehold. The freehold is owned by the Mary Magdalene and Holy Jesus Trust, and the head lessee is Home Housing Association. Both organisations have charitable status. Unfortunately, as she outlined, the leaseholders have not been able to enfranchise—that is, purchase the freehold interest—or, indeed, extend their leases. The frustrations and anxieties that this has caused are clearly evident in the stories that she relayed—particularly, as she pointed out, for families who wish to sell and relocate. The remaining terms on a lease may well mean that a prospective purchaser will find it very difficult to secure a mortgage.

So, specifically, what I am going to do? I have asked my officials to be in direct contact with the trust to see what help can be provided to leaseholders with regard to their desire to exercise their right to buy in terms of the freehold. We will cover what flexibilities there may be for the trust to apply existing legislation to help to resolve some of the issues raised by the hon. Lady, especially where the trust and the leaseholders are both willing and agree to progress either lease extensions or the purchase of the house freeholds.

Returning to the wider recent consultation, we will look at the responses and also consider issues on the disposal of charitable leasehold homes. This will need to show fairness to the needs both of the freeholder and the leaseholder, and also strike a balance with the needs of charities to remain on a sustainable footing to continue their good work. It may be the case that the hon. Lady’s constituents were not fully informed about their rights and responsibilities when they acquired their leases, especially the whole issue of enfranchisement exemptions attached to these particular charitable leasehold properties. That leads me to another general area of concern about the transparency, or lack of it, in the way some leasehold property is marketed—in particular, whether there is clarity over the terms of lease agreements at pre-purchase, and whether sales teams are working in the best interests of prospective leasehold purchasers.

I will, as part of our wider work on leasehold reform, consider whether changes to legislation are required to improve transparency and fairness for leaseholders who want to enfranchise, where their freeholder is a charity and both parties agree that a lease extension or enfranchisement is mutually beneficial. I also want to ensure that the future marketing of leasehold homes, whether for private or charitable provision, is clearly promoted and advertised by charitable organisations to their beneficiaries. I hope that my comments have provided some comfort to the hon. Lady and her affected constituents. My Department will absolutely continue to liaise with her.

When he reviews this case, will the Minister accept that the charitable association concerned works on behalf of mainly wealthy beneficiaries, so the question of real social justice and injustice is heightened?

I do not think it is appropriate for me to comment on the beneficiaries of the charity. What I would say—I think this will be of interest to the hon. Lady—is that one of my officials has already spoken to a trustee, who has outlined that they may well be willing to sell the property, extend the lease or carry out the enfranchisement. Lawyers in the Department are looking to see what flexibilities are available.

I thank the Minister for his comments and the tenor, which I appreciate, of his response to my debate. Will he confirm that he will work with the Charity Commission to ensure that, in this regard, charities set out to be good citizens and good neighbours, and that the brand of charities is not open to criticism?

I will, of course, consider what the hon. Lady has suggested. In terms of providing a positive outcome for her individual constituents, perhaps the most appropriate thing to do is to have that conversation with the trust directly. As I have said, the Department will continue to liaise with her on this case, and I hope that we will reach a conclusion that is satisfactory for her and her constituents.

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